Investor Presentation June, 2020 Dr. Reddys Laboratories Limited - PowerPoint PPT Presentation

Investor Presentation June, 2020 Dr. Reddy’s Laboratories Limited Hyderabad, India BSE: 500124 | NSE: DRREDDY | NYSE: RDY PROPRIETARY PROPRIETARY

Safe Harbor Statement This presentation contains forward-looking statements and information that involve risks, uncertainties and assumptions. Forward-looking statements are all statements that concern plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are other than statements of historical fact, including, but not limited to, those that are identified by the use of words such as “anticipates”, “believes”, “estimates”, “expects”, “intends”, “plans”, “predicts”, “projects” and similar expressions. Risks and uncertainties that could affect us include, without limitation: General economic and business conditions in India and other key global markets in which we operate; The ability to successfully implement our strategy, our research and development efforts, growth & expansion plans and technological changes; • Changes in the value of the Rupee and other currency changes; • Changes in the Indian and international interest rates; • Allocations of funds by the Governments in our key global markets; • Changes in laws and regulations that apply to our customers, suppliers, and the pharmaceutical industry; • Increasing competition in and the conditions of our customers, suppliers and the pharmaceutical industry; and • Changes in political conditions in India and in our key global markets. Should one or more of such risks and uncertainties materialize, or should any underlying assumption prove incorrect, actual outcomes may vary materially from those indicated in the applicable forward-looking statements. For more detailed information on the risks and uncertainties associated with the Company’s business activities, please see th e c ompany’s annual report filed in Form 20-F with the US SEC for the fiscal year ended March 31, 2019, quarterly financial statements filed in Form 6-K with the US SEC for the quarters ended June 30, 2019, September 30, 2019, and December 31, 2019, and our other filings with US SEC. Any forward-looking statement or information contained in this presentation speaks only as of the date of the statement. We are not required to update any such statement or information to either reflect events or circumstances that occur after the date the statement or information is made or to account for unanticipated events. 2 PROPRIETARY PROPRIETARY

More than ever people across the world need access to affordable healthcare Our purpose and promises remain relevant to achieve this need OUR PURPOSE OUR PROMISES Bringing expensive medicine within reach Addressing unmet patient needs Good Health Helping patients manage disease better Can’t Wait. Enabling and helping our partners ensure our medicines are available where needed Working with partners to help them succeed 3 We are committed to compliance, ethical behavior and sustainability PROPRIETARY PROPRIETARY

Dr Reddy’s is on a Transformation Journey Cr Crea eating ting mor more oppor e opportunit tunities ies wi with th less less ris risk Healthy Balance Leverage strong Value creation Sheet with net cash capabilities to through multiple surplus and sustained generate short and growth drivers , with cash generation long term growth optimal resources Leverage US portfolio Reduced dependency Optimizing the business ‘Risk to access global on specific products or Quotient’ through markets; augmenting markets for future the portfolio offering growth partnership model on through R&D and BD / high risk projects Licensing 4 PROPRIETARY PROPRIETARY

FY20 Key Highlights Successful in obtaining the VAI status for CTO 6 , and desired 1 outcome for all other site inspections by US FDA Strong improvement in key financial metrics of ROCE, PBT 2 and EBIDTA Healthy cash flow generation , leading to much stronger balance 3 sheet Turnaround performance for our North America generics and 4 our Europe businesses Healthy double digit growth in branded markets 5 Continued traction towards development of product pipeline 6 across our businesses Productivity improvement seen across manufacturing, 7 marketing and R&D PROPRIETARY

Healthy growth in Revenue & EBITDA Revenues EBITDA CAGR: 11% CAGR: 39% ₹ 4.6 k cr ₹ 17.5k cr ($ 0.6 bn) ₹ 3 .4k cr ₹ 15.4k cr ($ 2.3 bn) ₹ 14.2k cr ₹ 2.4k cr ($ 0.5 bn) ($ 2.0 bn) ($ 1.9 bn) ($ 0.3 bn) 17.0% 22.2% 26.6% FY18 FY19 FY20 FY18 FY19 FY20 EBITDA% to Revenues FY 20 financial performance includes certain one-offs: (a) income from divestment of PP Neuro products, (b) Canada Section 8 damages received for 6 Lenalidomide, and (c) impairment charge on certain intangibles (we do a trigger based impairment testing on intangibles every quarter) USD / INR = ₹ 75.39 (rate as on 31 st Mar, 2020) PROPRIETARY PROPRIETARY

Improving Return Metrics and Strong Balance Sheet, provides us an opportunity to grow further Free cash flow: Consistent generation of strong cash-flows Net Debt / Equity: Debt free; providing strength for expansion 24% ₹ 2.2k cr ₹ 2.3k cr 9% ($ 0.3 bn) ($ 0.3 bn) -3% ₹ 0.6k cr ($ 0.1 bn) FY18 FY19 FY20 Mar'18 Mar'19 Mar'20 Earnings Per Share (in INR): Improving year after year Return on Capital Employed: Continuous improvement in returns 117.4 113.1 24.0%* 14.7% 59.0 12.2% 8.2% FY18 FY19 FY20 FY18 FY19 FY20 7 * Adjusted for the impairment charge of 1,677 cr taken during the year USD / INR = ₹ 75.39 (rate as on 31 st Mar, 2020) PROPRIETARY PROPRIETARY

We continue to improve our cost structure and productivity R&D SG&A • 100+ submissions globally • Sales force effectiveness • Cost improvements programs • New leaders in Markets • API development 12.9% 28.7% 31.6% 1,900 14.0% 5,100 34.0% 33.0% 10.1% 8.8% 4,900 33.0% 1,700 12.0% 4,700 32.0% 1,500 10.0% ₹ 1.8 k cr 4,500 ₹ 5.0 k cr 31.0% ₹ 4.9 k cr 1,300 8.0% ₹ 1.6 k cr ₹ 4.7 k cr ₹ 1.5 k cr 4,300 30.0% ($ 0.2 bn) ($ 0.7 bn) 1,100 6.0% ($ 0.6 bn) 4,100 29.0% ($ 0.2 bn) ($ 0.6 bn) ($ 0.2 bn) 900 4.0% 3,900 28.0% 700 2.0% 3,700 27.0% 3,500 26.0% 500 0.0% FY18 FY19 FY20 FY18 FY19 FY20 R&D cost % to Sales SG&A cost % to Sales * Excluding impairment charge Harness digital Cost Better sites Manpower & automation leverage utilisation productivity 8 USD / INR = ₹ 75.39 (rate as on 31 st Mar, 2020) PROPRIETARY PROPRIETARY

Multiple growth drivers provide us a good visibility for a long term sustainable growth North China America API Europe Global India Speciality Injectables & Biologics Custom Russia Services Discovery Focus growth and Future value New growth cash generation creators, drivers, leverage partnership model spaces model We also continue to evaluate Ino Inorganic Gr ganic Growt wth h Oppor pportunit tunities ies across markets and value chain 9 PROPRIETARY

Key Business Updates Unit United Sta ed States tes India Ind ia Stable and diversified business model Market rank maintained at 13 on MAT basis  Improving the product offering : 27 launches in FY 20.  Leveraging Dr Reddy’s brand and going ‘Beyond the pill’ 99 pending filings (97 ANDAs + 2 NDAs)* through various patient centric initiatives  More than two-thirds of portfolio is ranked ‘TOP 3’ in  Ramp up share in Chronic and Super-specialty therapies market share in respective molecule markets through differentiated and innovative new products China China  Entering new Therapeutic areas and Nutraceuticals First mover advantage  Focus on improving field-force productivity Propriet Pr oprietar ary y Pr Products oducts  Extending the US portfolio to China, benefiting from recent regulatory framework De-risked model with continued focus on development and monetization through partnerships  Participating in 4 channels : Branded, GEA products to  Out-licensed Derma and Neuro portfolio during FY 19 hospital, GPO and API and FY 20 respectively. Continue to evaluate market  Olanzapine: won tender in the Centralized Drug opportunities for other assets Procurement program, first for any Indian Generics Company 10 * as on 31 st March, 2020 PROPRIETARY PROPRIETARY

Our Quality Journey Committed to excellence in quality and being best in class U.S. FDA Audit Updates We have received EIR for CTO-VI with a VAI status. This plant was issued a warning letter in Nov’15 All our plants now have either VAI or NAI status In addition, our sites have been approved by regulators from ~20 countries 11 *VAI – Voluntary Action Indicated | NAI – No Action Indicated PROPRIETARY PROPRIETARY

Sustainability & Compliance is our way of life Sustaina Susta inable value ble value Af Affor orda dable ble & & cha hain in innova inno vativ tive med e medicines icines Preser Pr eserve e the the Caring Caring for or En Envir vironment onment commu mmunities ities Diversity Div sity & Adh Adher eren ence ce to to the the Inclusivi Inc lusivity ty go gover erna nanc nce, e, risk risk & & in Wor in W orkplace kplace comp mpli liance fr frame amewor ork 11 PROPRIETARY